Last update on 2024-06-07

Big 5 Sporting Goods (BGFV) - Piotroski F-Score Analysis for Year 2023 (Final Score: 2/9)

Comprehensive Piotroski F-Score analysis for Big 5 Sporting Goods (BGFV) in 2023 shows a score of 2/9, highlighting areas of concern in profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 2

We're running Big 5 Sporting Goods (BGFV) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score, ranging from 0 to 9, helps evaluate a company's financial strength. Big 5 Sporting Goods (BGFV) scored a 2 on this scale. Key areas of concern include profitability, where the company posted a net loss in 2023, and declining Return on Assets (ROA). Liquidity metrics such as current ratio also showed a decline. On the positive side, the company maintained a positive cash flow from operations. However, there was a slight increase in leverage and a decrease in gross margin and asset turnover ratio, reflecting operational inefficiencies.

Insights for Value Investors Seeking Stable Income

Given the low Piotroski F-Score of 2, Big 5 Sporting Goods' financial health appears to be deteriorating, evidenced by negative net income, declining ROA, and increasing debt. While the company maintains positive operational cash flow, it struggles with profitability and efficiency. Hence, BGFV might not be a strong candidate for investment at this time. Investors should consider companies with stronger financial positions and higher Piotroski scores.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Big 5 Sporting Goods (BGFV)

Company has a positive net income?

Net Income represents a company's total earnings or profit. It is crucial to evaluate whether a company is generating profit or incurring a loss.

For the fiscal year 2023, Big 5 Sporting Goods (BGFV) reported a Net Income of -$7,083,000. This indicates a negative trend, much worse relative to the healthy profits reported in 2021 ($102,386,000) and 2022 ($26,134,000). This downward trajectory suggests deteriorating financial health. Hence, per the Piotroski Score criteria, BGFV earns a 0 for this metric.

Company has a positive cash flow?

Analyze whether the cash flow from operations for Big 5 Sporting Goods is positive or negative and, based on this, award one point if positive.

In the fiscal year of 2023, Big 5 Sporting Goods reported a positive cash flow from operations (CFO) amounting to $18,538,000. Given that the Piotroski F-Score awards 1 point for having a positive cash flow from operations, Big 5 Sporting Goods earns 1 point for this criterion. Despite a few years with negative cash flows, particularly in 2017 and 2022, the company has managed to maintain positive CFOs in most years, which is a positive indicator of financial health and operational efficiency.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company's ability to increase profitability. This metric is important for understanding how efficiently a company utilizes its assets to generate earnings.

In 2023, Big 5 Sporting Goods (BGFV) recorded an ROA of -0.0105 compared to an ROA of 0.0357 in 2022. This represents a significant decrease in ROA, resulting in a score of 0 for this criterion. The downward trend, moving from positive to negative, indicates a less efficient utilization of assets compared to the prior year. Using the historical data, it's evident that BGFV's ROA has been volatile, showing moments of strength pre-2017 but suffering considerably in recent years, while the industry median remained much more stable and consistently positive around 0.35 to 0.38 over the last decade. Consistency in industry ROA benchmarks coupled with BGFV's volatility underlines their operational inefficiencies and investment risks.

Operating Cashflow are higher than Netincome?

This criterion measures whether the company's operations are generating more cash than their net income indicates. A higher operating cash flow compared to net income can signify strong earnings quality.

For Big 5 Sporting Goods (BGFV), the Operating Cash Flow in 2023 was $18,538,000, while the Net Income was -$7,083,000. This significant discrepancy shows that while the company posted a net loss, its operations still generated positive cash flow. This suggests that the company's core business remains robust, despite what the bottom line might suggest. Given this information, we should add 1 point for this criterion.

Liquidity of Big 5 Sporting Goods (BGFV)

Leverage is declining?

The Change in Leverage criterion evaluates whether the company's leverage ratio has decreased compared to the previous period. Lower leverage means less debt burden.

In the case of Big 5 Sporting Goods (BGFV), the leverage ratio increased from 0.3127 in 2022 to 0.3149 in 2023. Therefore, the leverage has gone up slightly in 2023, indicating a marginal increase in debt load relative to equity. Historically, BGFV had a leverage peak at 0.4038 in 2019, and despite some fluctuations, leverage has generally remained relatively low. This increase is minor but not favorable per Piotroski scoring, hence scoring 0.

Current Ratio is growing?

The current ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. It is important for assessing liquidity.

The Current Ratio for Big 5 Sporting Goods (BGFV) decreased from 1.6927 in 2022 to 1.6265 in 2023. This indicates a decline in liquidity, As a result, this criterion scores 0 points. Historically, BGFV's Current Ratio has fluctuated over the last two decades, ranging from 1.44 in 2004 to a peak of 2.18 in 2014. Comparatively, the industry median for 2023 stood at 1.55, showing that BGFV is slightly above the industry standard, but not enough to signify an improving trend.

Number of shares not diluted?

Change in Shares Outstanding examines if the number of shares available to investors has increased or decreased, which can impact an investor's share of the company's earnings and voting power. A decrease in shares can indicate share buybacks, potentially signaling management's confidence.

Comparing the outstanding shares of Big 5 Sporting Goods, there has been an increase from 21,634,000 shares in 2022 to 21,749,000 shares in 2023. This indicates a rise in outstanding shares, setting the criterion score to 0. Over the last 20 years, the number of shares experienced fluctuations, with a notable decrease post-2013 and a relative stabilization beyond 2018. A sustained reduction was observed from 2013 (22,083,000 shares) to 2018 (20,977,000 shares). However, the increase in 2023 reverses the recent trend of stabilization or slight decreases.

Operating of Big 5 Sporting Goods (BGFV)

Cross Margin is growing?

The criterion for Change in Gross Margin assesses whether the company is improving its ability to generate profit from sales over time. A higher Gross Margin indicates better control over sales and cost of goods sold.

The Gross Margin for Big 5 Sporting Goods (BGFV) in 2023 is 0.3231 compared to 0.3427 in 2022, indicating a decrease. Thus, no point (0 points) is awarded in the Piotroski analysis for this criterion. Historically, the Gross Margin has shown various fluctuations, such as a peak at 0.3751 in 2021. Compared to the industry median Gross Margin, which is 0.3785 in 2023, BGFV’s performance is below the industry standard. This trend of decreasing Gross Margin is disappointing since it suggests that BGFV has less efficiency in profitability from sales, impacting its competitive edge in the industry.

Asset Turnover Ratio is growing?

Change in Asset Turnover is a key criterion in the Piotroski Score. It reflects a company's ability to generate sales from its assets, indicating operational efficiency.

In 2023, Big 5 Sporting Goods (BGFV) posted an asset turnover ratio of 1.3074 compared to 1.3612 in 2022. This indicates a decrease in asset turnover, signaling reduced efficiency in using assets to generate sales. Historically, the company's asset turnover peaked in 2003 at 2.6783 and has exhibited a downward trend since 2017. Given the unfavorable comparison between 2022 and 2023, the Piotroski Score for this criterion is set to 0. Continued declining asset turnover, exacerbated by pandemic-related disruptions and shifts in consumer behavior, remains a concern.